The Concept of Neutrality Means That

question 40

Multiple Choice

The concept of neutrality means that

• A) under similar circumstances, taxpayers should pay the same tax.
• B) the tax effect should not have an impact on business decisions.
• C) assets and liabilities should not be subject to taxation, only increases in equity.
• D) foreign and domestic source income should always be taxed at the same rate.

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Definitions:

Labour Efficiency Variance

The difference between the actual labor hours used and the standard labor hours expected for the level of production achieved, often related to workforce productivity.

Variable Overhead

Costs that fluctuate with the level of production or business activity, such as utilities or raw materials.

Labour Rate Variance

The difference between the actual cost of labor and the expected (or budgeted) cost.

Standard Hours Allowed

The amount of work hours allocated to complete a specific task or project, often used in performance measurement.